Flashcards
Contestable Markets
Cards in this deck (6)
- 1What are the characteristics of a contestable market?1. No barriers to entry/exit
2. No sunk costs
3. Hit and run competition - 2Comparisons to a monopoly?Lower prices - comp.
Smaller profit margins
Faster pace of innovation?
More dynamically efficient - 3What is the conduct?Normal profit in the long run
Ignore profit max principle
SNP attracts hit and run
Produce at AC=AR - 4How is it NOT realistic in the real world?Will always be sunk costs
Perfect competition - 5How will incumbants always have the advantage?Expertise with technology and the supply chain
New firms playing catch-up - 6What is important to remember about contestable markets?The number of firms is NOT important
The threat of competition IS
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- A-level Economics Flashcards on Contestable Markets, created by zoems on 10/11/2014.
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- zoems
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